Why you should stress-test your finances for a sudden death

Sitting down for a chat about your impending death - or your spouse's - is pretty morbid. I can think of a hundred things I would rather do with my husband during our precious free time together.

After all, we are both reasonably savvy when it comes to our money. He handles some aspects of our household finances while I take care of others, but we keep one another informed about what's going on and make the big financial decisions together.

That said, if I were struck by lightning tomorrow he does not know the online passwords to some of my accounts. And he might not know where to find my stash of financial papers.

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Mark Goodfield, a tax partner at Toronto's Cunningham LLP and the author of The Blunt Bean Counter blog, says that even today, in unions where both spouses have some level of financial acumen, most families have not thought about what would happen if one of them passed away unexpectedly.

He's not talking simply about having an updated will, although of course that is critical. What Mr. Goodfield says what couples of all ages should do is walk through the unpleasant scenario of an untimely death. "You should stress test how financially and organizationally ready your spouse would be should you die suddenly, or vice versa."

Mr. Goodfield says that through his work, he has seen plenty of cases where people pass away and their significant others aren't sure where their assets are - or how to access them.

"Obviously, people are dealing with grief and anxiety and no one wants to try and figure out where the insurance policy is or which bills have been paid." Although people will eventually sort these things out, you can make it easier for them to move forward financially during this emotional time by laying out this information, he says.

Here are the things Mr. Goodfield says you need to check, when stress-testing your finances:

1. If you have pre-paid your funeral or made other specific arrangements, is your spouse aware of that and do do they know where this information is located?

2. Does your spouse know where to find your will? More importantly, is your will up-to-date? If you own your own company, do you have two wills?

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3. If you have insurance policies, does your spouse that and know where they are?

4. Do you have a list of the assets you own and where they are located? Put together a basic information checklist and update it once a year.

5. Given how prevalent multiple passwords are, consider making your spouse a list of your key passwords. That list can go into the password-protected file on your spouse's computer or into another secure location. This is critical because you don't want your spouse to be locked out of financial accounts because he or she does not know the passwords, Mr. Goodfield says.

6. Do you have a list for your spouse with the phone numbers and contact information of your accountant, lawyer and financial adviser? Again, make a list and put it in the password-protected information file.

7. Do you have any accounts, safety deposit boxes, etc. that your spouse may not be aware of? It is important is that your spouse be able to access these, if you suddenly die.

The seven points above are just a starting point, a place to start thinking about whether you have prepared a proper trail to allow your grieving spouse to move forward, at least financially, with the least amount of stress.

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"People don't want to face the notion of their death," Mr. Goodfield says. "But the reality is that you will die and you don't want to leave a financial mess for your spouse."

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